BOEM Publishes Final Sale Notice for California Offshore Lease Areas

October 25, 2022

Energy Law

The U.S. Bureau of Ocean Energy Management (BOEM), on October 21, 2022, published the Final Sale Notice (FSN) for the California lease areas available for commercial offshore wind energy development. The December 6 lease sale will be the first offshore wind lease sale on the West Coast and the first U.S. sale to support potential commercial-scale offshore wind energy development utilizing floating foundation technology.

BOEM will offer five leases for sale—three in the Morro Bay Wind Energy Area (WEA) and two in the Humboldt WEA—that total 373,267 acres with the potential to produce over 4.5 gigawatts of offshore wind energy. The FSN lists 43 entities that are legally, technically, and financially qualified to participate in the lease sale. BOEM will use a multiple-factor bidding auction format that considers both monetary bids and non-monetary factors.

Bidders can qualify for bidding credits for (1) supporting workforce training programs and/or developing a U.S. domestic supply chain for floating offshore wind (20% bidding credit); (2) establishing a Lease Area Use Community Benefit Agreement (CBA) with communities expected to be impacted by the Lessee’s potential offshore wind development (5% bidding credit); and (3) establishing a General CBA with communities expected to be impacted by the potential impacts on the marine, coastal, and/or human environment from activities resulting from lease development that are not otherwise addressed by the Lease Area Use CBA (5% bidding credit).  Bidders can qualify for one or more of the bidding credits and the credits are additive (maximum of 30% bidding credit).

The FSN also describes several lease conditions and stipulations.  In response to feedback on the Proposed Sale Notice, BOEM incorporated conditions of the Coastal Zone Management Act Consistency Determinations that the California Coastal Commission (CCC) issued for the two WEAs earlier this year, including requiring Lessees to coordinate with the CCC in the development of survey and site assessment plans.  Lessees will also be required to implement vessel speed limitations and marine mammal monitoring measures; avoid intentional bottom contact; and use low-energy equipment to complete its geophysical surveys.

BOEM’s issuance of a lease to an entity does not constitute approval of project-specific plans to develop the area.  Lessee’s project-specific plans will require additional BOEM authorization and be subject to environmental, technical, and public review.  There is still a long road ahead for offshore wind in California, but the lease sale is a significant milestone.

As bidders prepare for the December lease auction, the California Energy Commission (CEC) is preparing a strategic plan for offshore wind development as mandated by Assembly Bill (AB) 525.  In a CEC workshop on AB 525 held earlier this month, staff announced that it anticipates releasing a draft permitting roadmap for offshore wind energy facilities and related infrastructure in November.  In the coming months, the teams responsible for various deliverables required by AB 525 are hosting public workshops to share progress and collect feedback.  By the end of the year we will have a clearer picture of who may be developing offshore wind off the California coast and what that development will require.